Samsung profit plunges 90 per cent in fourth quarter as chip market crash hits semiconductor giants
- South Korea’s largest company has been struggling with a historic slump in the price of memory as inventories pile up after a pandemic-fuelled surge
- Other industry giants including Intel, Micron, SK Hynix and Kioxia have made moves to cut spending
Profit at Samsung’s chip segment plunged more than 90 per cent to 270 billion won (US$220 million) in the three months ended December, as customers continued to work through piles of inventories, the company said. Operating income was 4.3 trillion won, missing the average estimate by analysts of 5.8 trillion won.
Net income was a better-than-expected 23.5 trillion won, thanks to a one-time item from a local tax law change.
China’s chip imports drop in 2022 amid supply chain disruption and US controls
South Korea’s largest company has been struggling with a historic slump in the price of memory, as consumers cut back on purchases of gadgets amid soaring interest rates and inflation. Inventory has piled up, forcing double-digit price slides that are deepening losses.
Memory pricing will likely continue to decline during the first half of 2023, Goldman Sachs analyst Giuni Lee said in a note to investors ahead of Tuesday’s announcement. “We expect the company to be in red for both DRAM and NAND starting in the first quarter of 2023.”
The industry is suffering from a sharp drop in semiconductor demand due to the war in Ukraine, historic inflation and restrictions on chip exports to China, right on the heels of one of the industry’s biggest capacity ramp-ups to meet pandemic demand.
01:57
China condemns new US law aimed at boosting domestic semiconductor manufacturing
US memory chip maker Micron Technology has said it will cut spending for new plants and equipment as well as slash output. South Korean chip maker SK Hynix has also scaled back investments and output, while Japan’s Kioxia Holdings Corp has said it was cutting output by 30 per cent. Kioxia, which makes NAND, is in merger talks with US production partner Western Digital Corp, Bloomberg News reported.
